Gerschenkron Model

ECONOMIC HISTORY Answers practice I 1. In the case of England, the agricultural sector played a key role in industrialization. This is mainly because, the improver in productivity in the sector led to an increase in the workers income, and this increase make possible for them to save more. The increase in savings led to an increase in investment in the industrial sector. When we are talking almost a backward country, the litigate can non be imitated.Backward countries had a traditional agriculture, and in that respect was not an increase of productivity, so the agricultural sector could not finance the imports of capital needed. Also it was much easier to borrow money from institutions than being babelike of the agriculture. 2. Although Rostow thought that countries followed a stage-like pattern of development, Gerschenkron firmly disagreed with this assumption Rostow implied that all countries repeating the same process of industrialization this could be seen as a inelucta ble law of scotch development.The process of industrialization of the advance countries was not the same as of the backward countries. For example, England did not pass water any institution to finance its industrialization, in contrast to the late-comers, who had a whole international financing placement built. This advantage of backwardness is what the Gerschenkron model is about. Each country had its own process of industrialization and it did not have to follow certain stages. 3. In set to industrialize, backward countries need to import large amounts of capital.The technology imported go away come from the advance countries, and go away help the relative backward countries to commence advanced. The process of industrialization of these countries will take, in fact, much less period compared to the advanced countries, because the technology imported is far more efficient than those employ in first place by the advanced countries when they were in the bosom of the proce ss. Since they have plan of attack to this new technology that the advanced countries did not have, these countries have an advantage for being backward economies. However, hese advantages do not come by nature to the country, hardly it is the government that needs to use the advantage in their favour in line of battle to achieve a modern economy in less time. 4. a) Big Spurt In the text Gerschenkron refers uses the term to nominate the moment when the industrialization in a backward country begins, and thither is a rapid economic growth. It is closely related to Rostows take-off but the prominent spurt focuses on the manufacturing and mining sector b) Missed opportunity This term it is used to describe the failure of applying the proper substitutions in a given economy in order to obtain a big spurt.Like the case of Bulgaria when in that respect was a failure to make the proper substitutions and there was not a big spurt. 5. The prerequisites for industrial growth are a) abolishment of an archaic framework in agricultural organization In order to increase the productivity of Land and of Labor, so there can be an increase of supply to face the increase of demand (due to the increase of population).This will increase the workers income, allowing them to save more, and therefore invest in the industry sector. b) Creation of a modern elite that seek economic growth In Europe, the Noble class had no interest in changing their way of life (serfdom), so in order to access industrialization there is a need to create a separate of influential entrepreneurs that seek a modern economy that is more profitable and efficient. ) Provision of a social over-head capital in physical crop In the backward countries, there is a need of capital in order to industrialize. The government must seek this capital by acquire it from financial institutions. Getting the capital by themselves was not an option, since there was not enough savings and it would have took much lo nger than just adoption the capital.